The Central Bank of Nigeria (CBN) has directed that henceforth, banks should sell foreign exchange to retail end users at airports without putting into consideration the 60:40 rule which prioritises the manufacturing and raw materials purchase.
In a new forex policy officially announced yesterday, the apex bank also cut down the tenor of its forward sales from the current maximum cycle of 180 days to not more than 60 days from the date of transaction.
LEADERSHIP recalls that the National Economic Council (NEC) had at its meeting last week, directed the apex bank to review the country’s foreign exchange policy. Council members had expressed concern over the prevailing foreign exchange situation in the country and called for an urgent review of the policy especially as it concerns the gap between the interbank and parallel market rates.
In a document signed by its acting Director, Corporate Communications, Isaac Okoroafor, the CBN said it will commence the allocation of forex to banks for personal and business travel allowances.
It stated that, having cleared the backlog of dollar demands of matured letters of credit, it will give banks forex that is commensurate with their demand per week, which would be sold to customers who meet usual basic documentary requirements.
The CBN had, over the weekend, directed banks to sell forex to customers to enable them pay for school fees, travel expenses and medical bills at N375 to the dollar, saying it will give $1 million per week for the sales done by the banks.
The document detailing the new forex policy made available yesterday reads: “CBN would meet the needs of parents, guardians and sponsors who are seeking to make payments of school and educational fees for their children and wards. Such payments must be made by commercial banks directly to the institution specified by the customer.
“The CBN would ensure that this process is as smooth as possible and that as many customers as possible get the foreign exchange they genuinely demand. This would also apply to customers seeking to make payments, or purchase foreign exchange, for medical bills and paid directly to hospitals”.
The new forex policy also directed all banks to open forex retail outlets at major airports “as soon as logistics permit, in order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates.”
The apex bank noted further that, to maintain confidence in the forex market, it will immediately begin implementation of its articulated programme to clear all the unfilled orders in the interbank forex market
“Given our plan to meet all unfilled orders, and while provision of forex to the manufacturing sector would remain the CBN’s strong priority, we will no longer impose allocation/utilisation rules on commercial banks”, it noted, adding that it will “implement an effective intervention programme to support the inter-bank market to ensure adequate liquidity necessary to deliver an efficient Forex market.”
The apex bank said it will also advise FMDQ to activate its forex Order-Book systems as soon as possible and also accelerate the on-boarding of forex clients on the forex Relationship Systems to ensure total transparency of the forex market.
“Given the CBN’s objective to continuously and vigorously pursue a transparent, liquid, and efficient forex market, the bank reiterates it would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff. The bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system and growth of our economy to the benefit of all Nigerians,” it stated.
In another circular to banks, signed by its director, financial markets department, Alvan Ikoku, and released yesterday, the CBN said it shall commence foreign exchange sales on weekly basis to banks classified into merchant banks, small banks, medium banks and big banks and that the sales, which will be every Tuesday, shall be for Personal Travel Allowance (PTA) and school fees.
For PTA, the new guidelines provide that the applicants must be 18 years of age and above, holders of Nigerian passport, account holders in the chosen bank, apply to journeys of not less than five hour flight time with the flight originating from Nigeria, travel must be undertaken not more than 14 days from the date of purchase of PTA, applicants shall present a tax clearance certificate, verifiable BVNs to their bankers and shall be entitled to $4,000 per quarter.
It further stated that applications shall be for university education only, remittances shall be made directly to the university’s account, applications shall be for not more than $15,000 or its equivalent per term/semester, applicants shall be recognised parents/guardians and shall provide their BVNs to their bankers.
Also under the new guideline, applicants shall present duly completed form “A” and valid tax clearance certificate of applicant, as well as admission letter and invoice from the university.
“All banks are expected to submit a daily return of their sale of foreign exchange for PTA and school fees to the Central Bank of Nigeria. The report must reach the director, financial markets department, on or before 4pm daily in soft and hard copies. The report must indicate applicant name, amount purchased, applicable rate (USD/NGN), purpose of purchase, beneficiary name and passport number. Any bank that fails to comply with this circular shall be sanctioned,” it added.
Source: LEADERSHIP